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GeoPoll Blog

What is the State of Retail Banking in Africa’s Biggest Economies?

Posted by Njeri Wangari on September 22, 2017

iStock_000022574901_ExtraSmall-1.jpgEquity Bank, GT Bank and Capitec are among the most preferred banks in Kenya, Nigeria and South Africa according to a recent GeoPoll Straw Poll. In an August 2017 survey conducted among 2,825 unique survey respondents in the three countries on customer satisfaction in retail banking, the level of customer service is the single biggest reason why bank account holders prefer one bank over another.

Overall, financial inclusion still remains one of the biggest challenges facing the banking system in Africa.                      

Financial Inclusion

Retail banking in Africa has yet to reach its full potential and financial penetration still remains low. Less than a quarter of sub-Saharan Africa’s population has access to a formal bank account, this is according to the African Development Bank group report of 2015 (pdf).

When asked whether they had an active bank account, 90% of respondents from Kenya mentioned that they did. 94% and 95% of the respondents from South Africa and Nigeria also stated that they had an active bank account. It’s important to note, however, that the survey was run from the GeoPoll mobile app thus only those with a data enabled smartphone participated in this Straw Poll.

Out of Africa’s total adult population 80%  do not use formal or semi-formal financial services, this is for a variety of reasons. Lack of formal income, banking costs and ease of access are some of the contributing factors to this lack of financial inclusion to a huge percentage of the population.

From the respondents that indicated  not having a bank account, a majority attributed it to “No formal income” at 66% in Kenya, 38% in Nigeria and 44% in South Africa. A majority of respondents in Nigeria and South Africa attributed their lack of a bank account to other reasons besides the ones presented in the survey which were; proximity to formal financial services, the paperwork involved and bank opening and operating costs. 

Most Preferred Banks
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African banks find themselves on a perilous path as they navigate the challenges presented by low banking penetration rates and a highly competitive market, this is according to the Retail Banking Africa 2016 report by EFMA in collaboration with Oliver Wyman (pdf)). 

There is a digital transformation happening in Africa and the banking industry has not been spared. Due to the changing consumer needs brought on by increased use of technology, many banks have not adopted as fast with many slowly playing catch up in providing services such as mobile and internet banking to their customers.

This may have attributed to the Primary and Secondary bank phenomenon according to our survey.

Respondents were asked in which bank was their primary account. 40% of respondents from Kenya mentioned Equity, followed by KCB at 35%. Co-operative bank was the third highly mentioned at 18%. As for Nigeria, 31% said that they used GT Bank as their primary bank. First bank was the second highly mentioned at 18% while Ecobank was the third at 10%. In South Africa, 39% of the respondents mentioned that Capitec was their primary bank, First National Bank was second at 29% and Absa third at 13%.

The number of respondents who indicated they had an account in another bank other than their primary one was 36% in Nigeria and 31% each in Kenya and South Africa. In Nigeria, 14% of respondents had three bank accounts whereas only 6% and 5% had similar number of accounts in Kenya and South Africa respectively. 

Overall Performance Rating of Primary Banks
Upon rating the overall performance of the primary bank on a scale of 1 to 10, where 1 was the lowest and 10 highest, South Africa’s Capitec had the highest average rating of 8. In Kenya, Equity’s average rating performance was 7. Nigeria’s GT bank had the least average rating performance of 6. The overall average performance rating for the three banks namely Equity, GT Bank and Capitec was 7, implying that on average the banks were performing well.

Customer Service & Convenience the Best Banking Service Offerings

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Customer service and convenience are the most loved features of the retail banking industry in the three African economic behemoths.

We posed the question, “Which features do you love most about your primary bank”. A majority picked customer service over other features namely; convenience, products & services, branding, stability, efficiency and transaction fees. Customer service as a winning feature in banking was picked by 68% of respondents in South Africa and 51% in Nigeria. However, most Kenyans chose convenience over customer service with the latter only being picked by 61% of the respondents.

Although convenience came second after customer service in South Africa and Nigeria, A majority of Kenyans (63%) prefer a bank that gives them convenience first.  62% and 50% of respondents in South Africa and Nigeria respectively picked convenience as the second best offering by their primary bank.

The respondents were then asked what they would rate as the most important feature when choosing a bank. In South Africa 74% said that they would rate customer service as the most important feature. 61% from Kenya and 55% in Nigeria had a similar opinion.  Those that said they would rate convenience were 62% in South Africa, 59% in Kenya and 51% in Nigeria. In South Africa, 65% of the respondents would rate Products & Services while in Kenya only 54% and 38% in Nigeria. In South Africa, 67% would rate transaction fees whereas 46% and 35% would rate the same reason in Kenya and Nigeria respectively

Worst Bank Service Offerings

Transaction fees, lack of good loan facilities and complicated loan processes are among the most noted by respondents as the reason they were unhappy with their banks.

Some of the biggest challenges faced by respondents with their current bank were:

  • In Kenya, 37% of respondents mentioned Loan facilities & processes with 22% mentioning Transaction fees. Customer Service was third mentioned reason at 6%.
  • In Nigeria, the biggest challenge was Transaction fees (26%), followed by Loan facilities & processes (17%) and lastly Customer Service at 12%.
  • In South Africa, there was a tied response rate of 24% each for Loan facilities & processes and Transaction fees. 12% of the respondents from the same country replied that it was due to Adoption of technology.
  • Other reasons stated by respondents as their biggest challenges across the 3 countries were Adoption of technology at 26%, Customer service at 21% and Long queues at 12%.

Word of Mouth Recommendation
Despite the challenges and frustrations with their primary bank, a majority of respondents would recommend their current primary bank to friends or family.  In fact, 95% of the respondents from Kenya, 93% from South Africa and 92% in Nigeria indicated they would. This being a high percentage response rate across all the countries, it implied that most of respondents were satisfied with their current primary bank.

For more, contact us today at info(at)geopoll(dot)com!

 

About GeoPoll Straw Polls
GeoPoll leverages its platform to engage mobile users through ad hoc “straw polls” that provide insights into real-time sentiments of current events. This GeoPoll rapid survey was conducted in August 2017 among 2,825 unique respondents in Kenya, Nigeria and South Africa using the GeoPoll mobile application.

Straw Poll Specs
Countries surveyed: Kenya, Nigeria and South Africa
Language: English
Mode: GeoPoll App
Questionnaire length: 14 questions
Median survey completion time: 20 minutes
Female: 46%
Male: 54%
18-24yrs: 42%
25-34yrs: 45%
35+: 12%

              

Topics: Retail banking in Africa, Customer Satisfaction in Banking,, African Banking

  

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